C3.ai, Inc.
Information Technology · Application Software
5B mkt cap; the only public name selling pre-built AI apps (vs platforms like $PLTR or hyperscaler primitives). Subscription → consumption pricing pivot (FY24) traded near-term revenue smoothness for usage-tied upside. Defense is the durable leg: USAF PANDA, US Navy, DoD readiness contracts renew on multi-year cycles.
Microsoft alliance (Azure co-sell, 2024) is the distribution unlock - every Azure AI deal is a C3 referral candidate.
- Defense backlog is sticky: USAF, US Navy, DoD multi-year contracts, low churn risk
- Consumption pivot lets revenue scale with usage as customer AI workloads grow
- $MSFT Azure co-sell alliance adds enterprise distribution C3 cannot build alone
- 50+ pre-built apps moat vs hyperscalers selling raw primitives ($AWS Bedrock, $AZURE OpenAI)
- Cash position covers multi-year runway at current burn; no near-term dilution forced
- Still unprofitable on GAAP; FCF negative through FY25 guide, profitability date keeps slipping
- Consumption pivot compressed near-term reported revenue, optics ugly through transition
- Hyperscaler primitives ($BDRK, $AOAI) commoditize the "pre-built app" pitch over time
- Customer concentration: top 3 verticals = >60% revenue, Baker Hughes renewal risk pre-FY26
- Insider selling cadence (Siebel) caps any sentiment reversal
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